Fintech firm settles with SEC over crypto lending product

Linus Financial has agreed to stop offering its retail crypto lending product as part of the settlement


Billion Photos/Shutterstock modified by Blockworks


Linus Financial, a Tennessee-based financial technology company, has settled with the US Securities and Exchange Commission for alleged securities laws violations.

Linus agreed to stop offering its retail crypto lending product. Per the settlement agreement, Linus Financial opted to neither confirm nor deny the charges, the SEC said Thursday. 

According to the regulator, Linus offered its retail crypto lending product between March 2020 and April 2022. 

Linus converted tendered assets into USDC and either transferred the USDC into liquidity pools on decentralized finance platforms or directly lent the USDC to institutional borrowers to generate returns for retail investors. Interest rates were generally between 3.5% and 4.5%, the SEC said

The SEC claims that the retail product contained an investment contract, thus subjecting it to laws under the Securities Act. 

In March 2022, after increased regulatory scrutiny on the crypto lending industry, Linus opted to unwind its retail product, directing investors to withdraw funds and closing the offering to new investors. All investor funds had been claimed by late April 2022, the regulator said. 

In light of Linus’ proactive decision to halt the product in 2022, on Thursday, the SEC said it would not be imposing civil penalties against Linus, instead opting to issue a formal cease and desist to the company from offering the product again. 

Stacy Bogert, associate director of the agency’s Division of Enforcement, said that “[t]he SEC will continue to hold companies accountable for failing to comply with federal securities laws.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member